At Super Financial Limited (SFL), we understand that managing tax compliance can be complex and time-consuming. HMRC imposes a range of penalties depending on the type of tax involved, and missing a deadline or payment can quickly become costly. Our team works proactively to help clients remain compliant, avoid penalties, and resolve any issues efficiently.
For Income Tax Self-Assessment (ITSA), penalties apply when a return is filed late. HMRC charges an initial penalty of £100 immediately after the filing deadline. If the return remains outstanding after three months, daily penalties of £10 are charged for up to 90 days. Further penalties are applied once the return is more than six months late, at the greater of £300 or 5% of the tax due. An additional penalty at the same level is charged if the return is still outstanding after twelve months. Higher penalties may apply where HMRC determines that information has been deliberately withheld. These amounts are calculated based on the individual’s total tax liability, which includes income tax, capital gains tax, and National Insurance contributions.
If a return has not been submitted, HMRC can estimate the taxpayer’s liability and later adjust the amount once the return is filed. In the case of a partnership return, each partner is liable for a separate penalty. The combined total of the six-month and twelve-month penalties cannot exceed 100% of the total tax due, although this limit may increase in cases involving offshore matters.
At SFL, we manage compliance requirements on behalf of our clients to ensure that all deadlines are met and penalties are avoided. Our automated compliance calendar tracks key dates and sends reminders well before each filing or payment deadline. We recommend preparing Self-Assessment returns early, ideally by October or November, to allow sufficient time for review, correction, and submission before the 31 January deadline. This early preparation helps reduce the risk of errors, interest charges, and last-minute stress.
Penalty Reform for MTD for ITSA
From 6 April 2024, taxpayers who voluntarily join Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will fall under HMRC’s reformed penalty regime for late filing and late payment. The first penalties under this new system will apply to annual obligations due in January 2026. The revised approach aims to be simpler, fairer, and more proportionate by focusing on persistent non-compliance rather than one-off mistakes.
Under the new regime, each missed submission will result in a penalty point. Once a taxpayer reaches two points, a fixed penalty of £200 will apply for late annual declarations. For late payments, penalties will be charged in two stages: an initial charge after 30 days and a daily accruing charge from day 31 until the outstanding balance is cleared. HMRC will not charge a penalty where a valid Time to Pay arrangement is agreed within 15 days or where a reasonable excuse exists, such as illness, bereavement, or technical difficulties. This updated system is designed to ensure fairness by distinguishing between occasional oversight and consistent non-compliance while encouraging taxpayers to make timely submissions and payments.
If a client has already received a Self-Assessment penalty, our experienced tax team manages the entire appeal process, preparing and submitting evidence to HMRC to request a reduction or cancellation where a valid reasonable excuse exists. For clients experiencing short-term cash flow difficulties, we also assist in arranging a Time to Pay agreement with HMRC, allowing tax liabilities to be settled in instalments and preventing further penalties from accruing.
Each year, SFL conducts an internal compliance review for every client to identify potential risks such as repeated late filings or underpayments. Based on this analysis, we create a tailored compliance plan designed to keep clients penalty-free in future years. We also believe in empowering our clients through education by explaining how HMRC calculates penalties, how interest accrues, and how appeals can be submitted online when necessary. Every Self-Assessment submission handled by our firm undergoes a two-stage review to ensure both accuracy and timeliness.
By combining advanced technology, professional expertise, and proactive communication, Super Financial Limited ensures that clients remain compliant, confident, and fully supported throughout the tax year. Whether it involves managing deadlines, filing returns, or preparing for Making Tax Digital, our goal is to make compliance straightforward and stress-free for every client.
For more information on Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA), you can read our detailed article here: What is MTD for Income Tax?
